Exorbitant butter prices unlikely to melt away any time soon

Thursday, 1 May 2025

Exorbitant prices for 500g blocks of butter don’t appear to be melting away any time soon, with one bakery director saying the increasing “indiscriminate prices” feel like “being held at gunpoint”.

The full price of a 500g block of Anchor Butter at Woolworths was $11 on Wednesday, but was $9.90 for those purchasing under the supermarket’s rewards scheme.

It’s cheapest option was a block of Woolworths salted butter, which was still $8.19.

At New World’s New Plymouth store, a block of Anchor was $11.09, or $9.99 if you were a member of its club card scheme - but that wasn’t the most expensive.

A block of Rolling Meadow butter was $11.29. The cheapest was Pams at $8.79.

At a Christchurch New World, Anchor was slightly cheaper at $10.99, Rolling Meadow was still $11.29, and Pams was $8.99.

At Pak ‘n Save Albany, Anchor was $10.59, Pams was $7.99, while in Christchurch, Anchor was $10.75 and Pams was $8.89.

Data from Stats NZ showed butter prices increased 63.6% in the 12 months to March 2025.

Managing director of Daily Bread, Josh Helm, said the business was currently in discussions with an Anchor and Fonterra representative after being told there was going to be a 12% price increase on butter sheets.

“This is on top of a 9% price increase we got last year,” he said.

“There is no escaping these indiscriminate milk solid price increases. These prices clearly affect our ability to make a reasonable margin and profit on our pastry.

“It’s almost like being held at gunpoint, because the fact is, there is a ceiling at which we can increase our prices.”

Fonterra, which owns Anchor Dairy, said on Wednesday no one was available to comment on the price of butter.

The price consumers in New Zealand pay for dairy products such as butter is influenced bythe global dairy commodity prices.

Infometrics chief forecaster Gareth Kiernan said international supply conditions had been weak during 2024, due to weather events restricting dairy production in Australia and South America, while high energy prices in Europe have also limited supply.

“At the same time, demand has been trending upwards, and this combination of factors have pushed up international dairy prices since about August 2023.

“International butter prices have risen more than prices for other dairy products, which is flowing through into the prices that shoppers pay at the supermarket here.”

Kiernan said there were expectations that international supply would improve this year, helping to limit further price rises, and demand could soften as the trade war weighs on economic growth internationally. Chinese demand for dairy products also looks to be fairly weak at the moment.

The latest Global Dairy Trade auction suggests that prices are consistent with a farmgate milk price of about $11.50/kgms, which is well above the $10/kgms Fonterra is currently working to.

“In other words, international dairy prices might need to drop as much as 15% before shoppers might see any relief in the supermarket.”